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DISH’s Bid for Clearwire Trumps Sprint Nextel’s Offer (CLWR, DISH, S)

Shares of Clearwire Corporation (NASDAQ: CLWR) rallied on Wednesday after DISH Network (NASDAQ: DISH) offered to buy the telecommunication company for $2.28 billion, trumping Sprint Nextel’s (NYSE: S) $2.2 billion takeover offer.

The latest offer is expected to intensify takeover fight between Sprint Nextel, America’s third largest carrier, and DISH Network as both companies would like to buy a company which owns very critical mobile spectrum.

DISH Network’s $2.28 billion offer confirms that the satellite television provider nurtures an ambitious plan to gain traction in wireless service industry. The Company has already spent $3 billion for acquiring much needed capacity.

DISH’s Chief Executive Charlie Ergen , who is known for his assertiveness,  had said earlier that he intends to enter the mobile broadband market and one way to get entry in this sector was by partnering another operator. Currently, the broadband market is dominated by Verizon Wireless and AT&T (NYSE: T). Both these companies have subscribers base of more than 100 million.

Nevertheless, the acquisition bid might not be very smooth as the company faces number of conditions. Firstly, DISH will require approval from wireless carrier Sprint Nextel, which currently holds 51 percent stake in Clearwire (Sprint claims to have veto rights over the sale of Clearwire assets).   Secondly, Sprint itself is keen on acquiring remaining stake in the company. However, Ergen could muster some support from Sprint’s biggest shareholders as current deal will tempt them to press Sprint to come to the negotiating table.

Meanwhile, Clearwire on Tuesday said that the DISH offer of $3.30 per share — exceeding Sprint’s $2.97 bid — was only indication of its interest in Clearwire and any agreement will be subject to a number of uncertainties, conditions.

Analysts are doubtful over deal, though. Chris King, an analyst at Stifel Nicolaus, told Reuters, “It’s very difficult to see how the deal would work over Sprint’s opposition. DISH is offering a decent premium but contingent on financing and Sprint waiving certain conditions — that they’ve already said they’re not going to waive.”

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